Yes. You are legally free to determine who you support financially: parents, children, friends, neighbors, etc. But watch out a bit and in principle only lend to whom you trust. Especially if they end up with you after the bank has refused a credit.
How much can I borrow?
There is no legal limit on loans between private individuals. Keep in mind that you cannot use this money for personal purposes until it has been repaid. If you do not request interest, you will in fact suffer damage, because your money would have generated (a little) interest in the bank.
Do I have to sign a document?
In financial transactions between people who have an affective bond with each other, the parties often hesitate to draw up a contract. Totally wrong! In order to avoid misunderstandings that could lead to a breach, it is advisable to clearly define the loan conditions in a loan agreement or a confession. The borrower and borrower usually prepare a handwritten document, but it is also possible to request this from a notary.
- Loan agreement: state the full identity of the borrower and borrower, the date and place, the characteristics of the loan (amount, any interest, etc.) and the way in which the amount is repaid. Also note how you make the money available: cash, via a bank transfer, etc. If necessary, state for what the borrower will use the money. Format the document in two copies and have them signed by both parties, preceded by the words “read and approved”.
- Debt: this is a unilateral commitment by the borrower to repay a certain amount to someone. In principle, it must be handwritten by the borrower. If it is not completely handwritten, the borrower must manually write the formula “good for” or “approved” and the amount in figures and in full in letters and he can only put his signature. Use this document if the repayment conditions and/or the duration of the loan are not determined in advance. The borrower can then reclaim his money with this document if he wishes.
Can I charge interest?
Yes, if both parties agree and the interest rate is clearly stated in the document. Take, for example, the interest that you would receive on a savings account or with another investment. But beware: interest means income for you and you have to pay taxes on it, the so-called withholding tax. It amounts to 25% of the interest received. For more information, visit the FPS Finance website.